Last year, rents of rental housing with an EPC label D, E or F or without an EPC were not allowed to be indexed or only half indexed. Since Oct. 1, 2023, indexing for these energy-hungry rental properties and rental properties without an EPC is again possible, but a correction factor must be applied to the calculation. This way tenants will not suddenly receive a very high rent after one year. This regulation only applies to rental housing located in Flanders.
Energy Crisis 2022
As a landlord, you may index the rent of a rental property once a year if this is provided for in the rental agreement, namely on the anniversary of the effective date of this agreement. Last year, the Flemish Government froze rents for energy-hungry rental properties in order to prevent tenants from having to pay increased rents in addition to increased energy bills.
Specifically, rent indexing was prohibited for rental housing with an EPC label E or F. For rental housing with a label D, only half of the indexing was allowed. Indexing was also not allowed for rental housing where there was no EPC. This measure applied from Oct. 1, 2022 to Sept. 30, 2023.
Indexation of rent since Oct. 1, 2023
Since Oct. 1, 2023, indexing for rental housing without an EPC or with a label D, E or F has been allowed again, but according to a modified formula.
If you want to index, you have to take into account the adjusted formula if i) the property is rented out as a primary residence on the private market (i.e., this does not apply to social housing or student rental agreements), ii) the rental agreement came into effect before Oct. 1, 2022, and iii) there is an EPC with label D, E or F before it or if there is no EPC before it at all.
The rent of a rental property that has an energy efficiency rating (label A+, A, B or C) or whose lease commenced from Oct. 1, 2022, is not subject to this correction rule and can be indexed in a normal manner.
Specifically, the following will apply:
|EPC label E or F||Indexing allowed again, but correction|
|EPC label D||Indexing allowed again, but correction|
|EPC label A+, A, B or C||Indexing can be done without correction (there were never any restrictions here)|
|No EPC present||Indexing allowed again, but correction|
|Leases effective Oct. 1, 2022, regardless of EPC label||Indexing can be done without correction (there were never any restrictions here)|
How does the correction happen?
The indexation of the rent is in principle done once a year and this on the anniversary date of the lease, according to the following basic formula: base rent x new index figure/starting index figure. This can be easily calculated with the rental calculator.
To apply the correction, one must first calculate the basic formula to then multiply this amount by the correction factor. To calculate the correction factor, a distinction is made between rental properties with EPC label D and those with EPC label E or F or without EPC, as well as between the anniversary date of the agreement. For the calculation itself, please refer to the tool provided by the Flemish Government. It also makes a list available on its website with the calculated correction factors.
Account annually for the correction factor?
Yes, as long as there is an EPC label D, E or F, or if there is no EPC, the correction factor must be applied to every indexation. It is only when there is a better EPC label (A+, A, B or C) or a new lease starts, that indexation can be 'normal'.
Specifically, therefore, indexing can be done in the normal way in the event that an EPC with label A+, A, B or C is before us or if the lease started from Oct. 1, 2022.
How will the government control?
The government will monitor compliance with these rules, but control will have to come primarily from the tenant himself. If the landlord incorrectly applies a rent indexation without taking into account the correction factor, a tenant will not be required to pay it.